Overview

This module covers the following topics:

• Four dimensions of business exit;
• Preparing a business for sale;
• Business valuation methods;
• Preparing an Information Memorandum;
• Involving the franchisor; and
• Post sale obligations.

Learning Outcomes

On completion of this module, a business owner will have an understanding of how to better prepare themselves for an orderly exit from their business in order to maximise their return on investment.  It explores how to prepare a business for sale and to determine a sale price, as well as compiling an Information Memorandum to assist buyers with their due diligence and to facilitate the sale process. The module also examines the involvement of the franchisor in the sale of a franchisee’s business, and common restraint of trade provisions and other conditions which may exist after the sale is completed.

Activity One:

• Review the Selling your business – Franchise versus Independent (PDF 30KB) resource.

• Visit a number of business for sale websites, such as: Australian Franchises, Franchise Business, and Seek Commercial.  Look at a selection of businesses in the field that you are interested in and monitor the prices weekly and note any changes.  This will give you a feel for how much business may be worth and if businesses are being sold quickly.

• Do further internet searches on the business you are interested in.  Are these business selling for more or less than a “Greenfield” site being sold by the franchisor (a Greenfield site is one where there is a new store opening)?  If these businesses are selling for less than a Greenfield site, then you need to delve deeper to find out why as you would normally expect a well run business and franchise to experience capital gains.

Activity Two:

• Read this sample business for sale agreement (PDF 115KB) to become aware of common terms and conditions.

Activity Three:

• Review Q&A with partner at L&M Partners, Rob Melin who provide many tips for when you are selling your franchise business. A transcript of the Q&A is available here (PDF 45KB).

Activity Four:

• Read Chapter 16, ‘Managing Growth and Transition’ (PDF 1.2MB),  particularly the section on Harvesting (p413-418) from Schaper et al’s Small Business and  Entrepreneurship book.

Activity Five:

• Download the Buyer Information Pack Template (Word doc 121KB). This will give you an idea of the information you’ll need to supply a prospective buyer when it comes time to sell.

• If you’re looking to buy a business compare the template to the information you’ve been provided and request any information that may be missing.